GM pushes new plant work rules
General Motors Corp. is pushing union locals across the country to accept
money-saving factory work rule changes or risk losing future vehicle
Working off a set of standards GM calls its "True North" practices, GM
leaders have been visiting plants to push for changes that range from
getting workers to take on more jobs to outsourcing work not directly
related to building vehicles.
GM's goal is to make its plants fully competitive with those of its Japanese
rivals in the United States.
"The corporation is telling the international and local unions that if
changes are not made, they will be unable to compete with our competitors,"
United Auto Workers leaders in Lordstown, Ohio, wrote in a recent newsletter
The strategy is not new, but in the midst of a massive restructuring, GM has
stepped up its efforts in recent months, sending managers to meet with union
locals about so-called competitive operating agreements.
GM loses $1,300 on average for each vehicle it makes in North America, while
Toyota Motor Corp. makes about $2,100 on each car and truck built here,
according to Sean McAlinden, chief economist for the Center for Automotive
Research in Ann Arbor.
While more flexible factory rules won't eliminate that gap, they could save
GM hundreds of dollars per vehicle.
It's a tough challenge
But changing long-accepted work practices is a delicate and politically
charged task for automakers and union leaders.
Workers who once literally could not turn a screw if it wasn't in their job
description are now being tapped to perform multiple tasks. They're being
asked to take on a greater role in day-to-day operations and assume
leadership roles for the first time. And the union is being pushed to
surrender work not related to building cars and trucks -- such as custodial
work and grounds keeping -- to companies that can provide cheaper labor on a
While such concepts are commonplace in Japanese-run factories, they run
counter to hard-won labor agreements that for decades have protected workers
in the domestic auto industry.
"We're going to sit down and negotiate responsibly," said George McGregor,
president of UAW Local 22, which represents workers at GM's Hamtramck
assembly plant. "It's negotiable if both sides can get something out of it.
Especially if it comes down to getting a job or not getting a job."
Where Ford Motor Co. has come out publicly pushing such agreements, GM is
taking a more subtle, gradual approach.
Ford has about 20 factories operating under more competitive work rules, and
has been straightforward about its desire to get the union to change.
GM doesn't talk much about its work rules, but the company over the years
has compiled scrupulously detailed data laying out exactly how well each
plant is meeting goals, which are based on benchmarks -- some set by GM,
some by other automakers -- that are deemed the best practices in the
business. Plants are graded on how closely they adhere to those guidelines.
The data comes into play every time GM doles out new production work.
"We benchmark every part of the business, and each plant is at a different
stage of the journey," GM spokesman Dan Flores said. "With the urgency of
where we're at in our turnaround, clearly we have to look for ways to close
the competitive gaps and to do it as quickly as possible."
Some plants adopt new rules
Some plants are further along than others. Two GM Lansing-area factories,
both opened within the past six years, have among the most flexible rules in
large part because GM was able to get a fresh start with the work force
At Lansing's Grand River Assembly plant, which builds the Cadillac CTS
sedan, workers team up on the line and everybody knows how to do everybody
else's job. They all cooperate to streamline the process.
"The fact is, you can't build cars like you did 30 years ago," said Fred
Charles, a union official for the plant's Local 652. "It's a constant
struggle. They have their ideas on how the business should be run. We want
to protect the high-paying jobs in America."
Perhaps no GM workers are under greater pressure than those in Lordstown,
where GM builds the Chevrolet Cobalt and Pontiac G5.
GM, which has long lost money making small cars in the United States, is
positioned to move that work to another country. Already GM is building the
new German-bred Saturn Astra compact car in Belgium. The car goes on sale in
the United States later this year as a 2008 model.
Many analysts think Lordstown could be in line to build that vehicle
eventually, if it can get the job done the way GM wants.
"GM can move production to Mexico or to off-shore and break the UAW,"
according to McAlinden, who said Lordstown is a plant to watch as an example
of how well UAW locals can compete in an age of globalization.
Negotiations on a new local contract agreement got under way this week in
Lordstown. Jim Graham, president of UAW Local 1112, which represents
Lordstown workers, declined to discuss the specific terms being discussed
with GM, but acknowledged that the plant's future is at stake.
"The key is to get a new car for Lordstown," he said Thursday. "It's not
going to be an easy contract. The membership understands that. They also
understand the importance of getting a new product."
New work rules in the plants won't save GM. Much of the profit gap the
company faces is from health care and retiree costs not shared by foreign
rivals. GM spends nearly $1,400 per vehicle on health care for retired and
But changes at the plant level can help, McAlinden said.
About 23 percent of GM workers fall into the highly paid skilled trades
category. Getting that figure down to 10 percent would save GM up to $180 on
each car it builds, he said.
McAlinden said GM will have a tougher time winning concessions than Ford
because GM has already announced which plants it will close as part of its
restructuring. Ford has said it will close plants, but has not specified
which ones, giving the automaker more leverage among workers who fear their
plant will make that list.
But, even at GM, workers know they're vulnerable and are willing to work
with the company, said Harley Shaiken, a labor expert at the University of
California-Berkeley. GM lost $91 million in the third quarter of last year
and saw its sales drop nearly 17 percent in January.
"Workers read the balance sheets, too," Shaiken said. "You've got a work
force at GM that is well aware of the severity of the situation and the need
to improve. You've got workers who want to see a successful GM."
"If they pull a knife, you pull a gun. If they put one of yours in the
hospital, you put one of theirs in the morgue."
Sean Connery, "The Untouchables"